CPP Financial Management & Revenue Control 2

Question 1

Which financial metric best measures a parking facility's ability to cover its debt obligations from operating income?

Accepted Answer

Debt service coverage ratio (DSCR)

Answer

DSCR divides net operating income by total debt service and is the primary metric lenders use to evaluate a parking facility's ability to service its debt.

Question 2

A parking operator notices that cash collections are consistently 8% below what the ticket-count audit suggests. This most likely indicates:

Accepted Answer

Revenue leakage due to theft or procedural failure

Answer

A consistent gap between ticket-count audits and cash collected is a classic indicator of revenue leakage, often caused by theft, ticket manipulation, or procedural breakdowns.

Question 3

In parking financial reporting, 'net operating income' (NOI) is calculated as:

Accepted Answer

Gross revenue minus operating expenses, before debt service

Answer

NOI equals gross revenue minus operating expenses (excluding debt service and depreciation), and is the key measure of a parking facility's operational profitability.

Question 4

Which budgeting approach requires each expense to be justified from zero each budget cycle, regardless of prior year spending?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting starts from a 'zero base' each period, requiring justification for every expense rather than adjusting prior-year figures.

Question 5

A parking garage has fixed annual costs of $400,000 and a variable cost of $0.50 per transaction. If the average transaction revenue is $4.50, approximately how many transactions are needed to break even?

Accepted Answer

100,000

Answer

Break-even = Fixed Costs ÷ (Revenue per unit − Variable cost per unit) = $400,000 ÷ ($4.50 − $0.50) = 100,000 transactions.

(CPP) Certified Parking Professional Practice Test

(CPP) Certified Parking Professional Practice Test

CPP Financial Management & Revenue Control 2